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June 2015: No turnaround in sight

No turnaround in sight. This is the bitter conclusion, yet again, following a look at PV market development in May. Although prices of panels from all Asian regions rose again by one or two percentage points, German and European panel prices remained flat. The fact that domestic manufacturers’ prices have held their own, apart from slight fluctuations, since October 2014 at an average of $0.60 cents per watt-peak is doubtless the result of the European Commission’s anti-dumping measures. Panels from other regions of origin are increasingly approaching this mark, but at what cost to the solar industry?

In light of the creeping decline in installations within the EU, this development is anything but good news. With new PV installations in Germany falling short of the 100 MW mark for the third month running in April, according to the German Federal Network Agency, and due to continuously rising prices that point to no real market growth, May and June are likely to be just as catastrophic. Other European countries are not faring much better. The burgeoning interest from markets such as Poland and Greece is not nearly enough to offset the weak demand from the traditional PV markets.

At the same time, artificially inflated panel prices are not necessarily needed to protect European manufacturers against competition from China. German manufacturers, in particular, with their highly automated production facilities see themselves in a position to offer their panels at prices well below the current minimum import price and not lose money. However, most domestic manufacturers rely on cells from places like Taiwan, as European cell production capacities are too low to keep up with the module production rate. This allows them to swim comfortably in the pond without fear of being swallowed up by predatory Chinese competitors, which Mr. Asbeck and the EU Commissioners are culling in increasing numbers.

Meanwhile, the systematic effort to force Chinese companies out of the European market has now taken on almost absurd dimensions. Even those operating production facilities within the EU are forced to comply with minimum prices. The reasoning behind this is that it is now supposedly impossible to distinguish whether panels that end up on the European market are of Chinese or European manufacture, as long as they have similar specifications and the same branding. The up-shot of this is the closure of production facilities due to lack of product attractiveness and a complete withdrawal from the EU area. Now there’s an outstanding way to ensure further job cuts!

We should not expect a change in this trend any time soon – to the contrary. This is particularly true in light of the European Commission’s announcement that its investigation will continue, this time with a view to imports from Taiwan and Malaysia. Fewer choices, longer waiting times, higher prices – that is the unfortunate outlook for the coming months, which will almost completely rule out a much-needed general market recovery in Europe. The U.K. is just one market that continues to be a source of good news. Once again, more than 1.6 GWp of capacity was added in the first quarter of 2015. However, to bring Europe back around to fair competition and positive growth, the alleged protectionism through market constraints must be abandoned. The plan has backfired.

May 2015: Minimum import price effect takes hold

Graphic: Solarpraxis AG/Harald Schütt

Module prices: Asian modules continue their price rise throughout April, but advocates of the minimum import price are winding up to deliver the next blow.

As expected, the rise in prices for Asian products has continued unabated in April. The module prices of the few surviving German and European manufacturers appear to have been bogged down since the start of the year. A slight updraft in the lower price segment, led primarily by German manufacturers, such as Heckert and Astronergy, countervails softening prices in the upper price segment. Nevertheless, producers continue to squeeze ever more generation capacity into the same area. These days, 260 to 270 Wp 60-cell modules have become the standard, and output continues to rise. Higher capacities by area are currently possible only with heterojunction cells (HIT cells) in Panasonic and Silevo modules, n-type cells from LG or back-contact cells made by BenQ and Sunpower, which also command significantly higher prices than the average.

Restrictions imposed by the EU Commission, in combination with comprehensive customs inspections, have slowed the flow of inexpensive goods from China and Taiwan into the European market. Furthermore, the latest increase in the minimum import price is apparently beginning to have an effect, as the slight recovery of the euro exchange rate was not accompanied by a commensurate drop in module prices. That is making it increasingly difficult to build financially attractive PV projects. It will be interesting to see which products and regions of origin are the basis of the winning bids in the recently concluded first round of German utility-scale projects and when the work will begin. Current price developments, at least, do not favor starting construction any time soon.

EU Prosun, an association initiated and dominated by German manufacturer Solarworld, has now lodged a new complaint against Chinese manufacturers. The CEO Frank Asbeck intends to spare no expense to prevent the currently valid undertaking with regard to minimum import prices and import restrictions from expiring on 7 December 2015. To the contrary, he wants to ensure the rapid enactment of a follow-on regulation to prevent an expected price drop. Meanwhile, the European Photovoltaic Industry Association (EPIA) has concluded that such protectionism in the European industry does more harm than good and has hobbled market development, prompting the association to call for the elimination of all market restrictions. This call deserves full and unqualified support.

The danger of European manufacturers with a similar anti-subsidy bent forming a front against the USA to prevent price dumping in the sale of power storage systems, as Karl-Heinz Remmers reported in his recent tongue-in-cheek commentary, is unlikely. At least that alliance would certainly not be led by Solarworld, since Asbeck earns good money in the states from subsidized module production. After all, it is unwise to mess in your own backyard. In China, however, the supporters of EU Prosun do not even have plot to set up shop on, much less a backyard. That makes it easy to set up a bogeyman against whom they can let off years of pent up steam. The absurdity of this fight cannot be reiterated enough, and a common strategy to counter it has to be developed and implemented. The EU has still not reached a decision about the future of minimum import prices – not yet, anyway.

April 2015: Upturn but no boom

Graphic: Solarpraxis AG/Harald Schütt

Module prices: Prices rise in March but not due to higher minimum price levels - the weak euro is to blame.

The steadily climbing prices for modules from outside the euro area have continued unfalteringly in the second quarter. One by one, Asian manufacturers have been raising their prices by a few percentage points, but ever so gradually, being well aware of the effect of higher prices. Only German manufacturers have managed to hold prices stable for the most part. A closer look reveals that, in some cases at least, stable prices can be traced to providers writing down inventories and selling modules at below list prices.

The wave of closures and insolvencies has, unfortunately, not yet subsided.Just as the mercury climbs in the springtime, the demand for solar components also usually rises. After all, customers with their eyes on the bottom line want to take advantage of every last kilowatt hour they can squeeze out of their new PV systems at a low price. That regularly fills up the order books of installers. But this year is different. The sustained weakness of the euro exchange rate has pushed prices up continuously since the end of last year. Module manufacturers and distributors recently confirmed that the latest rise in the minimum import price (MIP) for Chinese products by three-euro cents has had a negligible effect on current prices.

The widening gap between falling feed-in tariffs and rising prices is creating a noticeable drag on a market in desperate need of a boost. Even the lower cost of energy storage systems has not helped pick up the pace of sales. Although there is good demand for small PV arrays with storage systems, and profits are steadily rising in the segment, this can hardly be called a boom. Of course, price-conscious customers are waiting for prices to fall even farther and for the technology to improve before placing their orders -- if they do at all. Apart from those customers, this is a trend that is almost entirely limited to Germany. On the European level, widespread use of PV systems with smart power storage and energy management is still a pipe dream.

A small segment of the photovoltaics industry is enjoying increased demand, even if the cause is nothing to celebrate. With the end of winter and the severe storms in recent weeks, the demand for replacement modules has climbed sharply. Replacing a single defective module or entire strings keeps European installers and specialized wholesalers busy while bringing in healthy revenue.

March 2015: Uncertainty reigns

Graphic: Solarpraxis AG/Harald Schütt

Module prices: A planned increase in the minimum import price undermines confidence in the European market. The first Chinese manufacturers are turning their backs on the "voluntary price undertaking" agreement between China and the EU.

Despite relatively mild temperatures, PV demand in Europe has not quite hit its stride yet. March saw a slight price increase for modules from all regions of origin. That was primarily down to the weak euro, however. Nevertheless, a general shortage of cheap Asian goods is discernible.

In Germany, despite the weakening market, a rise in feed-in tariffs for PV is nowhere in sight. Over the past half year, less than 100 MW of capacity a month has been installed. This represents a significant shortfall from the planned expansion corridor and should actually trigger an immediate rise in the feed-in tariff. This is sure to be a topic of discussion over the next few weeks.

February has already seen lively debate over Chinese solar producers such as Canadian Solar, ET Solar, and Renesola. The EU Commission has accused these manufacturers of evading on a massive scale the voluntary price undertaking, a negotiated agreement between China and the EU aimed at avoiding a rise in import duty. The companies under fire have reacted very differently to the accusations, from outright denials to disinterested shrugs. Renesola, for instance, has announced that it wants to pull out of the agreement altogether and simply accept the duty on Chinese goods. The company already manufactures its goods outside of China anyway, and a vanishingly small proportion of its solar panels are bound for the European market. Moreover, dropping the agreement would in many respects make life easier for the company. Other producers will likely soon follow suit.

In addition, rumors that the minimum import price (MIP) will be raised by three euro cents to the original level of €0,56/Wp are solidifying. Against this backdrop, Chinese manufacturers in particular have announced price increases of up to ten percent. As of the publication date of this article it is not yet fully clear whether this is just a marketing ploy European solar companies are using to put dealers and installers under pressure or if the price rise is actually necessary. Impending price rises are known to bring short-term increases in demand and stocking-up purchases. The idea is that this brings down existing stock levels faster before the new goods are delivered at the current import prices.

It is obvious, however, that the European market could not handle a general price increase in the single- to double-digit percentage range. Already catastrophically low demand would completely flat-line, and the body count of bankrupt solar companies would inevitably rise. To avoid this fate, the solar industry must once again come together in a concerted effort and send a clear signal to the European Commission and the European Parliament that the minimum import price and the volume cap must be scrapped and anti-dumping measures done away with before it is too late.

February 2015: Job losses despite protectionism

Graphic: Solarpraxis AG/Harald Schütt

Module prices: The antidumping duties are not helping the European solar industry. Who wins, who loses?

A material shortage due to Asian manufacturers’ neglect of supplying the European market led to a slight increase in prices in January, despite restrained demand. The supply of polycrystalline solar modules from established Chinese PV manufacturers to the European market has slowed to a trickle. Feasible market prices simply no longer to conform to allowable sale prices. In many cases, high efficiency monocrystalline modules are the only ones that make it to market, which has necessitated an overall rise in prices.

The cost of products from Japan and South Korea were generally stable in Europe at the beginning of the year, all the more so because they occupy the upper end of the price range. Current fluctuations are more a result of rounding errors than trend indicators. German solar modules are slowly disappearing from the market, following the exit of Bosch, Conergy, Centrosolar, Hanwha Q Cells, and others. It’s anyone’s guess how long products from SolarFabrik and Aleo Solar will be available.

On the other hand, there are reports that the manufacturer Atersa has again started production in Spain and will offer European modules at a lower price than Asian imports. However, imports from regions other than China are not subject to price regulation. China, therefore, does not necessarily influence the market to the extent that everyone claims it does. At best, import limitations result in regional shifts and lull domestic manufacturers into a presumed sense of security until a rude awakening comes.

Who is benefiting from the European antidumping regulations anymore? Who profits at all from them, and who are the losers? Frank Asbeck’s SolarWorld AG, one of the initiators of the antidumping complaints in the USA and the EU, has managed to survive mostly from its international business. More than half of the company’s sales are now generated outside of Europe, and the figure is growing. Other European manufacturers, such as Norway’s REC Group, have also long since globalized their businesses. Although they still serve the domestic market, they manufacture their products almost exclusively in Asia.

Nevertheless, the EU commission is sticking by its import limitations. Rumor has it that the minimum import price (MIP) will even be increased in the course of this year. Southeast Asian manufacturers will have the most to smile about when they hear the news. These companies are already manufacturing their products with little price pressure and generally at full capacity. The orders are coming from large Chinese companies that have temporarily shifted their production. Whether this hastily established contract manufacturing is a sustainable business model and worth supporting remains to be seen.

In Europe, many PV wholesalers and installers have already dropped out of the market due to their product prices being unable to keep pace with the steadily declining incentives for PV. The result is a continuous erosion of the attractiveness of PV installations and demand. On the whole, this has probably caused a much more significant loss of jobs in the solar industry than the EU commission’s protectionist measures have saved in a handful of domestic production facilities. It is time to free up international trade in PV products again so that reduced costs and required price reductions can finally be passed on to the market.

January 2015: Further price reductions

Graphic: Solarpraxis AG/Harald Schütt

Module prices: A weak Q4 has once again led to a drop in module prices in Europe. Trina Solar and Yingli currently dominate the market.

Compared with the preceding month, module prices in Europe declined somewhat again in December. Existing stocks were apparently not reduced as quickly as PV manufacturers had hoped. As a result, further price reductions had to be granted for all types of modules and every region of origin. However, from today’s perspective it is not to be expected that prices will continue to decline. Many suppliers have now become cautious and adopted a wait and see attitude.

After the European PV market shrank continuously in the year 2014 for the third time in a row, special purchase orders seem to be the only way that modules from Asia are able to find their way to the Continent. As demand has built up early at the beginning of this year, triggered by mild temperatures, delivery bottlenecks have resulted – even in the case of standard modules from major manufacturers. In addition, the weak euro makes imported photovoltaic products more expensive throughout the entire value chain.

In the ranking of module suppliers with the largest sales figures, Trina Solar apparently outpaced the former industry frontrunner Yingli for the first time in 2014, according to the study conducted by IHS Technology. The list itself continues to be dominated by five Chinese companies which together delivered more than two gigawatts of output in the fourth quarter of 2014. Two Japanese and two U.S. companies also rank among the top ten. This development is fueled above all by the fact that these companies have healthy domestic markets where they are able to independently develop and realize major projects.

Germany no longer even plays a role in this league. German module manufacturers take the last places at best in the bid for the highest sales figures. In Germany the future is awaited with anxiety – particularly now that some passages of the German federal government’s more than 100 page regulation for bidding for solar PV projects have been disclosed. Insiders claim that the regulation represents a further nail in the coffin of the German photovoltaics industry. Apparently plans are to only develop a volume of 400 MW, which is, apart from the complexity of the bidding procedure, a further obstacle to the urgently needed development of renewable energies and recovery of the solar industry in the country.

One glimmer of hope for the German solar industry continues to be the sales figures for storage systems – in particular in the small systems segment, but in 2015 larger rates of growth are also expected for battery storage systems for commercial PV installations. For the time being, however, independence from legally prescribed remuneration, i.e. the Renewable Energy Act, appears to be the only way to rescue the German solar industry.

December 2014: Rock bottom

Graphic: Solarpraxis AG/Harald Schütt

Module prices: The European photovoltaics market continues its downward trend. New concepts are making new inroads but slower than expected.

Dwindling demand in Europe has kept module prices under pressure. Nearly every product across the board, regardless of origin or brand, has fallen by a couple of percentage points over last month's prices. Although there were hopeful signs in early November that the downward trend may be coming to an end, the figures continued their fall – mostly at the cost of already paltry margins.

In Germany, 2014 was the saddest year for PV since the introduction of the German Renewable Energy Act. Never before has there been such a slow fourth quarter in Germany. But Germany is not the only country affected. Apart from the UK, all of Europe has seen an unheard of crippling of the market. PV as an investment model is apparently dead in Europe, and establishing new concepts takes time.

In principle there are two approaches the industry could take to jumpstart business in Germany: build PV plants with little dependence on the Renewable Energy Act and ensure the financial feasibility of the plants in other ways, or build PV plants that are profitable, despite the current feed-in tariff. The latter approach depends on low construction and other costs, as well as very inexpensive components. This generally necessitates the use of low-quality products with limited guarantees and/or ambiguous origin. Used equipment and first or second generation thin-film modules are in high demand for low-cost concepts. That raises the question, however, of how long such an installation can last. Such doubts lead to the failure of many projects because investors get cold feet at the last minute before construction begins.

The other approach, which relies on generating additional benefits or helping the operator of the plant achieve independence from future energy price developments by maximizing self-consumption, appears to be much more worthy of investor confidence and is more future oriented. However, this approach requires much more technical understanding and a higher level of consulting expertise. A previously very simple business model (an investment model with a return of x percent) based on simple plant technology, suddenly becomes a highly complex system which has to strike a balance between the energy supply, utility network requirements, and consumption behavior and in the best case reduces to a minimum the exchange of energy between the power company and the plant operator through the use of modern storage technologies. It is obvious that this stage of evolution, this rethinking and relearning for all those involved, cannot take place overnight.

Many companies saw this paradigm shift coming and the changes it would bring. All that is lacking are opportunities and endurance. There is little or no historical data for the numerous promising technical approaches, most of which are in the trial phase, on which to build a solid business. Many installers, wholesalers and some manufacturers have scaled back their business in the industry over the years, and others have been forced out entirely. But many small, flexible and highly innovative companies have remained and had the courage to tap new markets with reworked concepts and take advantage of the huge potential which doubtless remains in PV 2.0. It will be exciting to see which companies and products emerge as the stars of 2015.

November 2014: Dark skies over Europe - with a silver lining

Graphic: Solarpraxis AG/Harald Schütt

Module prices: Installation figures in Europe have continued to fall, and market consolidation is still in full swing.

These days you have to look very closely to see individual rays of light in the very dark skies above the solar sector in Europe. The installation figures for Germany reported to the German Federal Network Agency [Bundesnetzagentur] have dropped again, with September having the lowest monthly figure for several years, nurturing the certainty that the 2 GW threshold will only just be reached, if at all this year. The outlook is hardly better in neighboring countries where barely any major solar projects are being implemented.

Module prices, however, are not dropping to the extent that would be expected of them in this market. Many manufacturers are looking towards markets outside the European Union where PV companies are still enjoying a boom. Although it is not always possible to achieve higher margins there, it is at least still possible to supply megawatt projects with a certain level of commitment. By comparison, on the immediate borders of the European Union – for example, Turkey or some of the Balkan states – more hot air is being generated than actual installations. Nevertheless, when acquiring materials for projects outside the European Union, it is possible to identify where the module prices might be if there were no anti-dumping measures against Chinese manufacturers – that is around €0.40/W ($0.50/W).

The much vaunted small power plant business is proving to be difficult for many suppliers as consolidation of the sector continues to advance. Many producers are gradually getting rid of the distribution structures since more and more distributors are giving up. Another renowned German company with a long tradition, Energiebau, recently got into difficulties and had to file for preliminary insolvency. Other distributors are trying to make an orderly retreat from the PV business. In terms of the European energy policy, it is a sad outcome for an important pillar of the successful energy transition to be destabilized in this manner.

So where are those chinks of light? More money is again being put into research and development worldwide, particularly in the development of more efficient and reasonably-priced storage technologies. In addition to basic research into novel material combinations and industrial research for developing cost reductions, there is also increasing finance for pilot projects with large storage devices. At the same time, growing numbers of small power plants are being sold with integrated storage and energy management systems. It appears that people have lost confidence in an energy transition from on high and are now taking matters into their own hands. This will also lead to new business concepts – and gratifying new prospects.

October 2014: European survival strategies

Graphic: Solarpraxis AG/Harald Schütt

Module prices: Are new business models the solution to the crisis in Europe?

Another month has passed again without substantial stimulation of the European market. This can also be seen as far as prices are concerned. While the module prices of Japanese or Chinese manufacturers stagnated in September once again, values across all regions of origin fell slowly, but constantly since the beginning of October. There was a disproportionate decline in the prices for German modules after several suppliers again decided on a clear downward price adjustment due to sluggish sales. This adjustment this year is earlier than usual. Apparently reticent demand has already caused fear of surplus inventories at the end of the year and so precautions are now being taken.

Whether or not the reduction, in particular in the case of high quality products, will result in general stimulation of sales is questionable nevertheless. The presence of cheap suppliers from the Far East who constantly devise new tricks with which to circumvent the import restrictions of the EU Commission – which have now been reduced to a shambles – has become too pronounced in the meantime. At the same time, however, there is growing interest in used equipment or products that have been devalued for other reasons. Missing warranties in the case of insolvency or used goods is frequently unimportant as confidence in the warranty assurances of still existing manufacturers is no longer very conspicuous anyway. Installers prefer to purchase a few extra modules and put them aside for future replacements rather than rely on empty promises.

The declining business in new installations is forcing many established systems integrators to either retreat or to rethink their business strategy. In an environment where manufacturers are creating their own Web shops and selling their products directly to installers there is no longer any room for multilevel sales. Module manufacturers do not shun doing business with small quantities or complete systems and some of them have even established their own lines of inverters. Thus it comes as no surprise when equipment and systems traders begin to abandon the distribution business and try their luck exclusively in the project planning business and in the operations and maintenance (O&M) segment.

However, the O&M segment is highly competitive. Companies that already have large parks under contract have a clear advantage over newcomers. Takeovers of entire companies or divisions are common practice, just to gain access to maintenance agreements. No one is willing to voluntarily sacrifice more or less lucrative agreements that may provide for solid and, in contrast to the trading business, predictable basic income. Recently large inverter manufacturers have begun to discover the market for themselves – like SMA Solar Technology AG, which recently took over the European O&M business of Phoenix Solar AG – an obvious step as the company is already involved in numerous projects through its service agreements. Consequently, it can also provide maintenance for other material. This is efficient and saves money for the operators.

Apart from monitoring, the added value in the case of service agreements consists in regular cleaning and maintenance, but also above all in repairing system failures due to damage (e.g. from hail, storms, fire, theft) or in the case of power losses (faulty system design, assembly or product errors). The demand for replacement modules and inverters constantly increases with the number and age of the installed systems. However, procurement of suitable replacement or substitute products is not always easy. Rapid technological development and the disappearance of many manufacturers have resulted in the fact that most original products are no longer available at ordinary stores. Installers and plant operators receive support in the search for suitable replacement products, among other things, from specialized trading platforms that offer new and used equipment with the most diverse specifications.

Through repair, optimization and maintenance of existing systems, solar companies help to maintain and increase the contribution made by the photovoltaic industry to the electricity mix as a whole and to confirm general confidence in the reliability of this technology. Of course jobs are also saved as a result because the market for existing PV installations will not become smaller in the foreseeable future, even if construction of new installations should remain in a state of decline.

September 2014: Dying a slow death in Germany

The existing EU minimum import prices for Chinese modules and cells are preventing a much-needed downward price adjustment for products of all regions of origin. The prices are still largely stable. Delivery volumes from Asian manufacturers for the European market are, at the same time, being progressively reduced. The action has, for quite some time, been found on other continents. While module prices for so-called non-EU projects, i.e. photovoltaic plants that are being built beyond the control of the EU Commission and its regulations, are once again (or still) located in the lower 40 eurocent range, prices within the European Union are stagnating just above the 50 eurocent mark.

The high-price policy prescribed by the European Commission is obviously not designed to help European manufacturers survive, let alone grow, in the face of tough international competition. At best it prolongs a slow death by a few quarters. Once successful trading houses and system integrators are continually having to give up, either through bankruptcy or withdrawal from the distribution business. Both the market and the business model itself are breaking down on them. Continuous, reliable supply, interim financing and good service have simply become uneconomical. The few goods that are currently in demand are forging their way ahead, but without the wholesale trade in the classical sense.

After years of growth, Germany will this year probably for the second time in a row see a market decline of at least 30% compared to the previous year. The energy transition is unnecessarily being hindered and delayed. The much-cited cost brake is being applied at the expense of renewable energy and, cynically, at the expense of consumers. Industrial electricity prices have, in contrast to end-consumer prices, not increased over the last ten years, as the German Association of Industrial Energy and Power Business (VIK) has found. Even the German Renewable Energy Act (EEG) surcharge account is currently well back in the black, although so many energy-intensive businesses continue to be exempt from the levy – the newly introduced participation of self-consumption power plants in the EEG surcharge is therefore likely to be totally unnecessary and counterproductive.

What would save the German and European photovoltaic market is an immediate abolition of the EEG surcharge on self-consumption, the removal of all administrative hurdles for the direct marketing of solar power, the abolition of the minimum price regulation and the restrictions of the import volume for crystalline Chinese cells and modules, and a simultaneous, complete waiver of import tariffs by the EU. At the same time the connection and feed-in priorities could be qualified so that only those photovoltaic plants technically in a position to guarantee the network stability at individual grid connection points may feed in. The solar industry already possesses sufficient strategies and policies to deal with this qualification.

August 2014: Taking a breather

Graphic: Solarpraxis AG/Harald Schütt

Module prices: July and August showed little movement in solar module market prices. The industry is searching for ways out of the summer slump.

The prices for modules from all regions of origin stayed mainly at the previous month’s level in July. Isolated fluctuations had no effect on the averaged prices. The initially brisk demand in the European market – driven by the date of the amendment to the German Renewable Energy Act – leveled off again towards the end of the month. It appeared most installers had already stocked up on materials by then and were busy completing as many projects as possible by July 31.

As expected, August has now got off to a quiet start – the industry is taking a breather. It’s vacation time at present in many European countries and as a result, domestic demand has dropped to practically zero. In many places, even the weather conditions are against any installation activity with the sun also taking time out.

So there’s currently plenty of opportunity to reflect on the future of PV in Europe and develop survival strategies. Demand may be increasing globally – China, Japan, some Central and South American countries and even South Africa are becoming conspicuous – but European companies can’t readily access these regions. The Asian markets in particular are pretty tightly sealed against foreign investors. “Expertise, yes please!” but then the money’s supposed to stay in the country. This is where the industry could do with more support from the politicians.

What exactly are the recipes for success for companies that rely on their domestic market? Small and medium systems with energy storage devices which cover the majority of the operator’s own consumption no longer pose a problem technically speaking. In Germany such systems are also increasingly interesting from an economic point of view, in spite of the Renewable Energy Act levy for systems above 10 kWp. The range of storage systems suitable for households is expanding constantly and the components are becoming more and more reasonably priced. The German market leader Sonnenbatterie, for example, recently introduced a slimmed-down version of its LiFePo energy storage device. The sales price for this has been reduced by 40% compared to the standard product.

Another future market could be heat generation using PV, several prominent scientists confirmed. The advantages of a combined system with intelligent control are obvious – solar combined heat and power generation, so to speak. Unlike the classic solar thermal systems, which must first reach a certain temperature level before there is an uncontrolled discharge of all the energy to a storage device that frequently suffers from high losses, the energy generated using PV can either be consumed directly, stored in the interim or converted into heat if such heat is also required. There are already several technical solutions for this on the market which are more or less mature.

In the high-capacity PV power plant sector, it appears that in future the tendering model will establish itself throughout Europe. At least this is the direction in which all the considerations and announcements of various politicians are pointing. However, it’s appropriate to ask whether the concept might not turn out to be something of a damp squib given the complicated procedures and maximum price limits, such as was once the case in Spain. In Germany, lower component prices than those we are still finding at present – the reasons for this also being political – would be needed for the economically viable construction and operation of large-scale systems.

It is for the reasons outlined above that the demand for second-hand modules or other competitively priced remnants is rising constantly at the moment. Really good offers on second-hand goods are rare, however, and the risk of a bad buy is quite high. At any rate, the offer should come from a reliable source, the origin of the modules and the reason for their removal should be well documented and, in the ideal case, they should be supplied with up-to-date measurement records. In the remnants sector, we should mention thin film modules. In most cases, these are products from the last-but-one generation (using amorphous silicon) that are now being brought onto the market at significantly discounted prices, or possibly bankrupt stock (CIGS or microamorphous modules).

Many formerly hopeful thin film suppliers have unfortunately left the market again. At present there is (too) little movement in the area of new solar cell technologies although the anti-dumping measures for crystalline cells and modules in the USA and Europe must have provided a little breathing space for some manufacturers and developers. Where’s the pioneering new product that puts all the others in the shade in terms of its price-performance ratio and where's a new "First Solar"?

July 2014: Growth in demand stymied in Germany as solar booms in UK, Japan

In the course of June, module prices from all regions of origin fell to the lowest level so far this year. This development was arrested at the turn of the month, the curves flattening out in early July or even partially turning up. The expected growth in the market, brought about by the announcement of the amendment to the Renewable Energy Act (EEG) in Germany, has made itself felt both in prices and delivery times. Suddenly not all module types are immediately available. Since, however, many projects are supposed to be online by July 31, there is a run on European stock items.

The aforementioned growth in demand is, unfortunately, very modest and not to be compared with the hysteria of previous years, in which enterprising traders, by way of precaution, filled their warehouses to the brim. On the whole, confidence levels of the project planners and installers for July are already dimmed since assembly capacities are already fully stretched until the end of the month. And new projects have been put on hold until the text and date of the Renewable Energy Act amendment have been fixed. It appears, however, that the August 1 date can be met after EU Commissioners withdrew their opposition and gave the go-ahead to the retention of industry privileges. The burden of the energy transition will therefore continue to rest primarily on the shoulders of consumers and small businesses.

After the sobering reports from the German market, however, there is also good news regarding the photovoltaic expansion numbers in England and Japan. In the last four years we have only been able to dream of such growth here. For example, between the second quarter of 2013 and the second quarter of 2014, a total of 7.185 GW of solar power capacity were installed in Japan. Kyocera also announced the design of a 430 MW project in which a German project development company is also to be involved. And that even though local feed-in tariffs had already been lowered by 11% since April. In the U.K., photovoltaic systems with a total capacity of 1.47 GW have been installed this year, almost 50% more than in the entire previous year. And 2013 itself was a record year in terms of growth rates.

Reports with similarly positive messages reach us on a weekly basis from Chile, announcing the construction of increasingly large projects. The currently installed photovoltaic capacity in Chile to May was admittedly still very small at 176 MW. However, this almost doubled in June with the inauguration of a 100 MW solar power plant, which was designed and built by the Chilean subsidiary of the American project developer SunEdison. A further 72 MW solar project from SunEdison and another from and with First Solar, providing 141 MW, are coming soon.

Despite recent reports from companies such as juwi and Belectric, it remains to be seen which of the German project developers, which for a long time led international rivals by a significant distance, will join in and grow with the globalization of the photovoltaic industry. Hopefully a few of them will actually be involved!

June 2014: Summer boom expected

Graphic: Solarpraxis AG/Harald Schütt

Module prices: Calm before the storm

The prices for modules from China enjoyed a breather last month while the few products from Germany that remained on the market continued in their race to catch up. Huge price differences still exist, however, between German or European goods and those from China and Southeast Asia.

Large farms are now only implemented with module purchase prices below the €0.50 mark. Small systems on the other hand, which in Germany are now often equipped with storage technology and energy management, are not as price-sensitive. Here it is still possible to use modules that have prices fluctuating in the region of or above €0.60 per watt like most of the products from Germany, Japan or Korea.

The highest demand within Europe is still from the United Kingdom, where new megawatt farms are constantly springing up. A steep rise in installation figures, however, is also expected for Germany in June and July since on 1 August 2014 the Renewable Energy Sources Act will again be adjusted, making a further expansion of photovoltaics even less attractive. Consequently, everything that is already at an advanced planning stage and that can also somehow be completed must be connected to the grid by the end of July.

At Intersolar, Europe's biggest solar trade fair which again tempted many industry players to Munich at the beginning of June, it was not only good and above all value-for-money products that were sought after but also ways out of the crisis. Many exhibitors offered "intelligent" system solutions with storage systems and energy management. Given the "solar tax" still publicized by German government representatives, i.e., the contribution of private and commercial PV systems to the Renewable Energy Sources Act levy, it is doubtful whether these complete and frequently also complex solutions will become the universal remedy. Here too, profitability and therefore marketability are determined by the purchase prices of the individual components. Storage systems, however, are still not so reasonably priced that they can automatically be integrated in every project. Practicable solutions are still being sought in vain for medium to large-scale plants.

As a result, module and inverter prices are still what tips the scales – they are the deciding factor for the attractiveness of a PV investment. And, as already explained initially, the requirements and ideas of many buyers are very ambitious. As a result, prices are being driven further downwards, regardless of the EU regulations and the ambitions of SolarWorld CEO Frank Asbeck, who is continuing undeterred to fight against Asian dominance in cell and module production by recently announcing 1,000 infringements against the European-Chinese minimum price undertaking.

But what use to all of us are prices that are kept artificially high if we lose the market in the process? The market demands reasonably priced products and will ultimately be served by whatever tortuous paths necessary. For those involved it will only become riskier. In the end, the winners will not be those who are quality-aware, careful and honest. No, it will be those who are ruthless and irresponsible, the players who are still in at the end of the game. We must apply the lever somewhere else entirely – or simply attempt to play along in the globalized market.

May 2014: Downward adjustment

Many Asian manufacturers are already openly discussing price cuts, which had, however, already been gradually introduced some time ago. Wide-ranging price reductions were on the horizon in April, but have not really materialized yet. Around the Easter weekend, the entire market seemed to be on vacation, and the price reductions may have not been communicated. Demand plummeted significantly over Easter, but no major price change was to be seen in April. Chinese manufacturers are leading the way to price cuts, with all others having to follow suit. February’s price increase of Asian products was of short duration and is expected to be reversed. This downward adjustment is urgently required, at least in the European market. The challenge now is to improve the subdued mood and end the general paralysis clouding the market despite perfect weather conditions for PV installation. After a quiet February and a sleepy early March, customers and installers are finally waking up. In late March and the first weeks of April, more orders have likely been placed than in the entire previous weeks this year.

The situation is becoming trickier for Chinese PV manufacturers. Over the last few months goods have piled up, creating not insignificant stock levels. Many suppliers have imported their modules or stored them in European customs warehouses without having a buyer, in order to avoid losing the allowed quotas. A reduction in the approved amounts looms if the negotiated import volumes are not consistently achieved.

The market slowdown in Europe has put China’s solar companies under pressure and ultimately led to new negotiations with the European Commission (EC), which has evidently been persuaded that changes are needed. The new minimum import price, which ranges between €0.53 and €0.54 per watt, according to unconfirmed statements, is at a level that has already more or less established itself in the market through sophisticated evasive tactics on the part of the manufacturers and importers, in defiance of EU directives. These tactics could prove costly to some manufacturers, however. Entire ship loads are currently being subjected to special investigations by customs authorities and are therefore missing from the market. Some contingents are even being withdrawn from Europe after weeks of the customs blockade. This will presumably have no effect on any further price trends, however.

April 2014: Little movement

Graphic: Solarpraxis AG/Harald Schütt

Modules prices: Modules are generally available – but not necessarily when it comes to inexpensive alternatives.

There were no real surprises in terms of the development of prices in February and March. Very little movement can be seen on the market at present. The average prices have only shifted by plus/minus one cent around a stagnating average value for several weeks now. The upward trend among prices for crystalline modules from Southeast Asia has also come to a halt. In the price ranking, Germany changed places with Japan/Korea and moved up to No. 1 – thus products from Asia are again more inexpensive than European or German PV modules.

Altogether though, prices are still too high to step up demand. Inexpensive alternatives are in demand – but rarely available. The employment of thin film modules is being considered again for the first time, in particular for larger photovoltaic projects in Central Europe. In recent weeks pvXchange registered increasing demand for thin film technologies. However, the offer is quite modest for lack of existing manufacturers. Numerous production facilities were ramped down in the past two years or shut down completely. Modules made from amorphous silicon are available as leftovers at best, while tandem and/or hybrid modules (a-Si/µ-Si) are barely manufactured due to a lack of demand. The few remaining manufacturers of this technology predominantly supply their products to projects near the equator where the modules prove to be especially effective due to their thermal properties and where the market is not as sensitive to prices.

The former thin film star First Solar is almost completely out of the picture. Distribution has been reduced to a minimum. For the most part only complaints are handled and, in small measure, plant extensions – but at less than attractive prices. After the company’s experiences with performance degradations that affected supplied products as a result of a production error in the year 2011, which led to large-scale recalls and replacements that persist to this day, First Solar largely withdrew from the European market. Today the manufacturer appears to produce its cadmium telluride modules predominantly for its own projects in the multi-megawatt segment in the USA and Asia.

Although CIGS modules can already keep pace with the efficiency of the crystalline competition, the active module surface and the maximum performance class are still much smaller with around 150 Wp for series products. In addition the specific prices are almost without exception above those of crystalline modules from all regions of origin – which disqualifies the product for larger photovoltaic systems. As a result the attempt has been made for years to position the company in the premium segment particularly among small-scale systems. However, brands such as SunPower, Panasonic, BenQ or LG with their high-performance crystalline cells are much more successful in this segment.

So Mr. EU Commissioner, what then remains in the lower price segment? Prices clearly below the fifty cent mark can only be realized in the European Union with no-name modules from often dubious sources, insolvency goods or scrap production. A switch to second class merchandise with reduced warranties or insolvency goods entirely without warranty is not an option – at least in the case of medium-sized to large-scale projects where price sensitivity plays a role, because investors and banks do not play along in most cases.

March 2014: A rough wind

Graphic: Solarpraxis AG/Harald Schütt

Module prices: Continued low demand and cuts in the remuneration for European PV systems invoke the specter of a renewed collapse of the market.

While the prices for German modules and products from Japan and Korea remained stable, products from the remaining Asian regions showed a slight price increase over the turn of the year and modules from several Asian countries such as Malaysia, Taiwan and the Philippines increased in price yet again. This is most certainly attributable to heightened interest in modules that continue to be approximately 10% less expensive compared with Chinese products.

Despite the mild temperatures, demand in Europe remains behind expectations that had budded in January. Apparently the urge to make purchases and carry out installations has been decidedly decelerated by the persistent bad news from policymakers. Price enquiries frequently fail to result in subsequent purchase orders. Often the desired profitability of a PV system cannot be materialized due to continued stagnating component prices and diminishing feed-in tariffs.

A slowdown of this degressive adjustment in Germany is a long way away from being enough, an increase in remuneration alone would be able to prevent a further collapse of the market – but this presumably remains wishful thinking in light of the current political constellation.

The energy regulatory authority in France (CRE) also made further cuts and specified new feed-in tariff rates that apply for PV systems as of March 2014. Meanwhile in France there are invitations to tender for installations with a rated output of more than 100 kWp, so that these no longer participate in the feed-in tariff program. The French government increased the annual target for additional installations in March 2013 from 500 MWp to one gigawatt. Nevertheless, only approximately 743 MWp were installed altogether in the year 2013. This was the second year of decline.

The British Office of Gas and Electricity Markets (Ofgem) also published new feed-in tariff rates that will apply as of April 1, 2014. The remuneration for solar electricity from PV systems with a rated output of less than 50 kW declined by 3.5%. Moreover, according to information from government circles, efforts are being made in general to get away from subsidizing larger photovoltaic power stations through feed-in tariffs – first through cuts in the Renewables Obligation (RO) program and now through the new program “Contracts for Difference” for power stations with more than 5 MW of rated output.

All in all a much rougher wind than before is blowing for renewable energies in Europe – which does not make the market particularly interesting either for manufacturers or for investors. For these groups other continents are moving increasingly into the focus. Has the proverbial “caravan” finally drawn past Europe, or can it still be stopped?

February 2014: Reserved

Graphic: Solarpraxis AG/Harald Schütt

Module prices: Prices have hardly changed over the turn of the year. Will there still be a solar winter and, if so, how long will it last?

The market appears to be like the weather in Germany – mild temperatures in January accelerated the inclination among Germans to purchase photovoltaic power plants and components somewhat faster than is otherwise the case at the beginning of the year. But nevertheless, ice and snow will inevitably let the German market freeze. Stagnating prices for cells and modules at declining rates of remuneration will then take care of the rest.

As already expected, the prices for crystalline modules from every region of origin have hardly changed over the turn of the year. The trend even appears to be shifting slightly upward, since inexpensive remaining shares have been almost completely swept from the market.

Regular commodities from China cannot be obtained in the EU below the agreed minimum price. Although all kinds of tricks are used with which importers believe they are able to circumvent the antidumping directives, this is not without substantial risks. Thus every prospective buyer would be well-advised to have the origin of the modules – as well as the cells employed – precisely documented, even if the buyer will not be directly affected by a subsequent penalty duty. Any possible warranty and guarantee matters are clarified more easily if the upstream supplier still exists and is able to be identified.

The strongest demand in Europe is currently in the United Kingdom. Project developers have to complete their large power stations before subsidies within the scope of the Renewables Obligation (RO) program are to be cut in the second quarter. According to their own information several European module manufacturers are providing supplies almost exclusively to the British Isles.

In the rest of Europe demand is more reserved, at least as far as conventional PV installations are concerned. However, tests of alternatives beyond state-controlled remuneration rates can be increasingly seen. The market for energy storage remains one of the greatest sources of hope in the year just started, ushered in by numerous product announcements and supporting information events and conferences.

It will also be interesting to see whether the list of 109 photovoltaic companies that are particularly eligible for subsidies as recently published by the Chinese government will lead to disruptions among the Chinese industry. Only those companies that appear on this list from the Ministry of Industry and Information Technology (MIIT) may look forward to further subsidies as well as participation in government invitations to tender. However, not all analysts and market experts share the opinion that this will lead to accelerated consolidation among Chinese manufacturers.

January 2014: On to the next round

Graphic: Solarpraxis AG/Harald Schütt

Module prices: After the game is before the game. The year 2013 in review.

Although the downturn in prices for Japanese and German crystalline modules on the European spot market slowed in November, it could not be stopped. Even prices for modules from China gave way again. Only the prices for imports from southeast Asia stabilized, with a slight upward trend towards December. This development is explained by largely exhausted import quotas and simultaneous sales of the abundant goods stocked from China at reduced rates.

The year 2013 was calm as far as general price development was concerned. If prices in 2012 only saw one direction, independent of the respective technologies – downward – they remained quite stable over 2013, and have even converged. Prices for Chinese and southeast Asian modules are currently only 18-25% below the prices for products from Europe and Japan. In January 2013, China’s module prices were still 36% below those of Japanese products. Since then the Japanese market has cooled down somewhat, in turn bringing more Japanese and Korean goods to Europe.

Over the year as a whole, modules from Japan and Korea have put the largest downward adjustment behind them, with just under 15%, while markedly smaller changes were to be seen among German modules, with -10% and Chinese modules, with a 7.5% rise. In 2012, prices fell by 30%, on average, from January to December, and in the years before that, even more. This dynamic movement is no longer to be expected in the future.

In 2013, the PV market was characterized by cuts in the feed-in remuneration and/or solar subsidies in many European countries. Many ostensibly healthy enterprises struggled or had to give up completely. In the best cases, orderly insolvency proceedings were conducted independently. An investor did not always come along from the Far East to save the day. Several well-known names and brands fell by the wayside.

Since the end of 2012, the worldwide PV industry has been concerned with anti-dumping and anti-subsidy campaigns. At first there were just a few participants, starting with the USA opposing the threatening market supremacy of Chinese module and cell manufacturers. The result is well-known – the EU commissioner in charge reached agreement on minimum prices and maximum import quantities with most Chinese manufacturers. However, European manufacturers – for whom this support frequently came much too late – were not necessarily the beneficiaries of the trade disputes.Instead smaller and, up to now, insignificant module and cell manufacturers from the remaining Asian region reaped the benefits by experiencing a boost in demand, particularly in Europe in the last quarter of 2013. That resulted in a boom comparable only to when Chinese manufacturers entered into the German and Spanish market in the years 2006/2007.

The consolidation – an elegant euphemism for company mergers and failures – among manufacturers, wholesale dealers and project developers in Europe will presumably continue this year. Other big names will disappear, but new stars will also appear time and again. SolarWorld will buy the solar division from Bosch – or will it be the other way around? Let’s wait and see.

December 2013: End of the year spurt

Graphic: Solarpraxis AG/Harald Schütt

Module prices: The stagnating European market and inventory clearance sales have sent prices plummeting at the end of the year.

After weeks of stagnating prices, a slow but constant decline in prices began in October, particularly for modules made in Germany and/or Europe, but also for products made in Japan and Korea. Thus last month’s assessment indicating a lack of movement has to be corrected. Apparently there is still quite a bit of latitude for price reductions, precisely when it comes to previously more highly priced products. Where the causes of these reductions are to be found and whether or not this trend will continue will be analyzed in the following overview.

The prices of German products in particular are rapidly moving in the direction of those of Chinese manufacturers – they showed an overall reduction of just under 4% within the month of October, and this trend is continuing. The price decline among Japanese and Korean brands was even greater. Up to now they had remained at a high level – now, however, the prices for these products have moved as much as 5.2% in the direction of the rest of the Asian competition.

The prices for silicon, ingots and wafers are currently at an all-time low. However, this is not merely a development of recent weeks – and thus is not suited as the sole explanation for the current situation. Instead, the reasons can be found in an increasingly weak European market; the figures on additional installations send a clear message that cancels out quick sales of the respective commodities and inevitably results in inventory surpluses. Chinese manufacturers evidently underestimated local demand and/or have thus far been unable to build up sufficient sales pressure. Now they are forced to determine what to do with the import quantities granted to them on the European market in the weeks to come.

The strong decline in prices in the group of manufacturers from Japan and Korea is primarily due to the sudden appearance of a number of very inexpensive Korean modules. When it comes to forming average prices these ample and often large contingents – compared with the rather modest offers of Japanese origin on the spot market – have a very dominant impact.

In contrast, the development of prices among German products is currently shaped by warehouse clearances and sales of remaining stock. New insolvencies are being announced by German manufacturers and wholesale dealers almost on a weekly basis. For fear of being stuck with less attractive goods without any warranty claims, high depreciation allowances are accepted while the products of faltering manufacturers are jettisoned as quickly as possible. How quickly a once highly coveted product can lose its value on the market when a manufacturer gets into trouble was clearly demonstrated in the case of Suntech Power, the formerly premier Chinese solar company.

Any fear of missing the boat among installers and investors is a thing of the past. This time the end of the year spurt will presumably take place among manufacturers and wholesale dealers, so we can still expect to see several surprises on the module market in the weeks to come.

November 2013: Price movements level off

Graphic: Solarpraxis AG/Harald Schütt

Prices are generally stable. How can Asian manufacturers continue to stand out from the competition?

Prices on the European photovoltaics market have been largely stable now for several weeks. Hardly any upward or downward outliers can be registered. As already mentioned last month, two price levels are becoming increasingly clear for Asian modules – one for modules that stem from Chinese production, which is subject to the EU agreement and thus a restriction on imports; and one for modules from the rest of the Asian region – for which there are no regulatory matters. With the pvXchange Module Price Index we took account of this through the introduction of a new price curve last month. This new curve is also largely horizontal.

While price movements on the module market are tapering off, the producers on the other hand are outdoing each other with one new record after the next as far as cell and module efficiency are concerned. The strategy, on the part of Chinese manufacturers in particular, appears to be that, if prices can no longer be varied as a result of the EU Directive, at least the performance of the modules sold at a specified price should be constantly increased. At the moment it is becoming clear that hardly any modules below the 250 watt mark are still being put on the European market by the leading Asian manufacturers.

Another effective means with which to justify higher prices is known to be better service. However, a number of suppliers of photovoltaic technology continue to have a problem in this regard. The European offices of Chinese manufacturers are being closed or reduced to only a few staff. New, comparatively small Asian producers are unable and unwilling to afford representative European offices as long as market prospects are so incalculable. Unfortunately, wholesale dealers and distributors, who normally would be able to take over such service for the respective manufacturers, are disappearing by the dozen. Thus, there is still ample room for new ideas and approaches – outsourcing of after-sales services, as already practiced by First Solar, represents only one of the possible solutions.

Hopefully a lot of manufacturers will at least enhance their product quality accordingly and incorporate additional quality assurance measures into their manufacturing operations in order to ensure just that. This is the first place where manufacturers looked to save during those periods of the lowest prices. If this austerity policy is now finally a thing of the past, then the antidumping proceedings conducted by the EU Commission would in fact have an upside. Good quality comes at a certain price – this goes without saying. However, the solar industry has increasingly come to learn that a much higher price has to be paid for poor quality – plant operators and insurers certainly have their own stories to tell.

October 2013: New low price suppliers

Graphic: Solarpraxis AG/Harald Schütt

The negotiations concerning the import prices for modules from China and modules with Chinese cells, together with the EU Commission’s antidumping proceedings and the temporary agreement with a majority of affected manufacturers are already leaving their mark.

Supplies from China still dominate the worldwide PV module market; they are, however, no longer the lowest-priced PV panels in the EU. It is important to differentiate between the goods imported and declared before the August 6 and those imported more recently. This results in two possible prices – the former generally below and the latter considerably above the magic number: €0.56/Wp. The lower-priced goods are becoming increasingly scarce and may well disappear in the near future. All well-known Chinese brands are now available in almost any quantity but at a price of around €0.60/Wp, plus a waiting period for delivery is to be accepted as they must first be brought out of China. This availability in the EU is, of course, a direct consequence of the regulated import prices. There is hardly a project of any size in the EU that can cope with this current price level, resulting in projects being shelved until more cost-effective alternatives can be found.

These alternatives are emerging from an ever-widening range of Southeast Asian suppliers. These newcomers, who were completely unknown and unnoticed in Europe up to now, are enjoying growing popularity due to their very attractive price level. The countries of origin are Vietnam, Malaysia, and, of course, Taiwan. Many importers can already offer quotes on some of these new brands, the quality of which, however, is largely unverified and unknown. The prices of these modules are in the region of €0.50/Wp, assuming container delivery. A familiar challenge now awaits investors and banks: the inspection of certificates, measures of quality assurance and the reliability of the manufacturers – in short, their bankability. Existing whitelists are becoming obsolete.

This development has prompted us to adjust the pvXchange Price Index. In future there will be a new graph or rather, price point, representing the spot market price of crystalline modules from these countries. We will call this group “South and Southeast Asia,” incorporating the above-mentioned countries plus Thailand, Indonesia and India. The average market price quoted for this group can also be applied to those Chinese modules which need not be imported into the EU – it gives, so to speak, a general picture of the world market price for Asian goods. The price curve for Chinese modules will be continued, representing imports into the EU. At the same time we will discontinue the price survey for thin film modules. As reported in a previous article, it is no longer possible to provide a representative average price survey due to a lack of appropriate products and offers.

September 2013: The end of free enterprise or a new dawn?

Graphic: Solarpraxis AG/Harald Schütt

The discussions on antidumping tariffs for Chinese cells and modules in the EU finally came to an end a short while ago. As is well known, minimum import prices and maximum import volumes were agreed upon. Prices fluctuated until the middle of July in the face of the ongoing discussions and have been effectively frozen since the end of the month. Now there are hardly any goods to be found on the market below the EU-mandated €0.56 mark. At least the uncertainty and speculation are now at an end. Conditions for those Chinese manufacturers that have submitted to the price and volume restrictions are fixed and, at least for the time being, not up for negotiation.

However, the major manufacturers in China are under no pressure to sell. They are increasingly selling their products, often at higher prices, to clients outside Europe, some even achieving record quarterly sales figures. Trina, Jinko, Canadian Solar and ReneSola share almost 40% of the world market between them but have not had a major presence in Germany or the EU for a long time. Hanwha, increasingly attempting to establish itself with Q Cells in the premium price segment, has ruled itself out as a supplier of low cost solar modules, along with other big suppliers from South Korea.

It remains to be seen whether smaller manufacturers from Taiwan, other parts of Southeast Asia or even India and Pakistan will be able, in the foreseeable future, to fill the vacuum which has been created in the lower price segment. Before Chinese manufacturers cornered the European market, perfectly viable products were available from these regions in the mid-2000s. Indian module producers in particular were neck and neck with the competition from China in the race to take market share away from the (at the time) dominant Germans, French and Spanish. However, once the domestic market in India was discovered, nothing more was heard from these firms in Europe. Technically speaking, Indian products are at least close to the required standard and that goes without saying for Taiwanese products.

It now remains to be seen how quickly these new, promising module manufacturers can provide the necessary capacity for the European market and one can only hope that over-zealous EU commissioners don’t immediately decide to batten down the hatches again.

August 2013: Prices for modules from Europe and China are converging

Graphic: Solarpraxis AG/Harald Schütt

The current antidumping procedures and the resulting shortage of Chinese goods on the European market lead to a slow but continuous convergence of prices. Compared to the previous month with an average price difference of 44.4% between modules from Germany (representative of Europe) and China, the difference now amounts to approximately 37.5%. Thus, on the spot market German modules are only about one third more expensive than Chinese modules.

However, it is becoming more and more difficult to compile a representative price survey that takes different cell types into account. On the one hand, there are just a few different technologies left on the market. On the other hand, larger remnants from bankruptcies or clearances are emerging on the spot market. They can set a single price point, but they can also greatly distort the overall picture. For cadmium telluride modules, for example, First Solar is the only important provider, but the company installs their modules as much as possible in their own projects. The only products that are freely available on the market are mainly remnants from former distributors. Additionally available are goods from insolvencies of failed First Solar competitors, which can be sold at very low prices due to missing guarantees and return facilities. Another example is modules from German production: who knows which current module type will still be available in the future? There is not much to buy right now, except closeouts and insolvency goods. At least the buyers get high quality products for their money and (hopefully) won’t have to deal with the event of a complaint.

When it comes to crystalline modules from China we currently have to specify two very different prices, for duty paid goods and for undeclared goods. Since the difference seems to be consistently about 12%, we only list duty paid goods in the price index. An end to this “dual system” with all its consequences is not in sight. Although China is increasing the pressure by continuously opening new antidumping investigations, for example regarding European wine, steel and chemicals, the EU has not buckled so far. Accordingly, a further gradual increase in prices can be expected. Right now it is also almost impossible to get a binding quote from a manufacturer for deliveries in September or October. Long-term was yesterday, flexibility and decisiveness is the need of the hour to snag some of the last few inexpensive modules in the market.

July 2013: Chinese manufacturers respond to European antidumping tariffs

Graphic: Solarpraxis AG/Harald Schütt

Whether we call it calculated or an act of defiance, it is a fact that Chinese PV modules are only reluctantly finding their way to Europe at the moment. Until recently it was no problem for an investor or project developer to buy modules directly from Asian manufacturers and get them delivered on schedule, but the situation has now changed radically. Currently, hardly a manufacturer sends its containers filled with PV modules to Hamburg, Rotterdam or Antwerp without having received a supply contract first. All freely available goods that have been deposited in the past few months at least sporadically in European interim storage facilities have been sold off. Whoever currently asks for products of major Chinese manufacturers is directed to the respective distributors or system integrators. Most of them have secured larger quantities at their own risk in their warehouses. The prices have been raised according to the risk premium and the new Customs Tariff. At the moment new orders for Chinese tier-1/tier-2 products have delivery commitments for mid to late July. But there is still a risk that due to transport problems the goods could even be delivered in August. No one can predict what sort of consequences to expect right now. The tariff surcharges of 11.8%, which the European Commission announced on June 4, are only a transitional solution for June and July. If the anticipated tariffs of around 38 to 68% come into force in August, the importation of modules into Europe may potentially ruin many buyers, meaning they will do anything to cancel the purchase contracts. Accordingly, the market is reacting cautiously to the offers. It is claimed that the behavior of Chinese suppliers is not only due to customs issues, but also to the fact that markets like Japan, North and South America and China absorb too many modules. But given the reported numbers of installations compared to the huge production capacity this seems rather implausible. It is more likely that China would like to demonstrate how dependent Europe is on their goods, especially in the solar industry. Now it is up to us to break this blockade either by entrusting our politicians to end the antidumping affair. Otherwise we will have to focus on our local manufacturers again and swallow the bitter pill of high prices. This might be acceptable if we could then expect higher quality and durability of products.

June 2013: Antidumping tariff recommendation leads to more uncertainty in the market

Graphic: Solarpraxis AG/Harald Schütt

After months of speculation about antidumping tariffs on Chinese PV modules, now the cat seems to be out of the bag. In the second week of May, EU Trade Commissioner Karel De Gucht recommended to implement provisional duties ranging from 37% to 68%, or 47% on average. This surpasses the original assumptions of many market participants by far. The trend seems clear, but uncertainty is growing and new issues arise: How shall the surcharges be measured – based on the difference between the reference price and the actual selling price? What selling price should apply here – the end-user price, the installer price or the contract price for the wholesaler? And what reference price is essential – the trading price of SolarWorld modules? Shall all products be traded for a standard price in the future? And here’s one last question: How big can the chaos get? China will not put up with the announcement of antidumping tariffs and increase pressure on the European Union. The loser in this trade war will be the European PV market. Despite the efforts of the EU, the online marketplace pvXchange does not detect a decreasing demand for Chinese products but a great caution due to the currently incalculable risks: the decisiveness and thus the actual closure rate is decreasing significantly. Until now, the stakes of many manufacturers and importers were high; they offered their modules with a surcharge, calculated on the basis of moderate tariffs. However, there are more and more offers whose contractual conditions include a risk sharing model with a wording like: “Should duties NOT be introduced, the buyer receives a full refund of the surcharge. If the customs duties will exceed the calculated 6/10/12 percent, the additional costs will be shared.” Based on the now expected duty rates this could lead to a high financial burden for the buyers. Return expectations would turn into certain losses. Therefore professional financing cannot be performed and larger projects can hardly be realized. If the EU sticks to these plans, the market will come to an abrupt halt. Chinese manufacturers will withdraw and wait. And European producers might have to make do with small and micro power plants. Is that a basis for survival?

In Europe, the price increase for photovoltaic modules is not quite as strong as expected, at least until now. In particular, thin film module prices remained relatively stable, with March showing barely any movement. For crystalline modules from Japan, there was even a moderate price decline, while prices for European and Chinese modules increased slightly in this class.

The new EU regulation introduced on March 5, under which all imports of Chinese solar panels have to be registered, initially caused considerable disquiet among all market participants in Europe. The sudden onset of high demand for modules already on stock in the EU led to upwards adjusted prices, but only in the first few days. Meanwhile, solar module prices have stabilized again and even slightly decreased, so they only increased by 1 to 2%, compared to the previous month.

What are the reasons for the quick recovery from the initial shock within the industry? It is as simple as this: necessity is the mother of invention. In addition, due to the frequent ups and downs in recent years, the PV industry is somewhat hard-nosed. Flexible solutions for every situation and loopholes are found quite quickly. After the remaining stock was sold, new goods were imported from China. The associated risk is not assumed by the manufacturers , which regularly offer untaxed goods (under Incoterms rules CIF, FOB or EXW), nor the local dealers or installers.

The implementation of such registrations has caused jitters among European buyers. Since the amount of the punitive tariff duties is not assessable yet, no final sales price (calculation basis for all sorts of PV systems) can currently be shown. At the moment, this makes financing nearly impossible. Manufacturers from China relocate this risk by transferring the import of the modules to the buyer.

Accordingly the run on goods currently stored in the EU has been huge. During the first days after the details of the directive became known, the demand for, as well as the price of the modules, increased by as much as 10%. These stocks of Chinese goods are, however, set to drastically decline over the weeks to come. Many dealers are now buying for stock again.

What opportunities do Chinese manufacturers have for defusing this situation? The directive (if it is similar to the law applicable in the United States since 2012) concerns solar modules with crystalline wafers and cells from China. As far as possible, the affected manufacturers could equip their products with cells from Taiwan, which would result in a price increase of a few cents. Many Chinese manufacturers are already seeking out production capacity in Europe. This would lead to a price increase for end products "Made in Europe" by at least 10 Cent/Wp.

March 2013: Trend reversal for PV module prices is observable

Graphic: Solarpraxis AG/Harald Schütt

The end of photovoltaic module price declines, which became apparent within the last few months, was confirmed by recent investigations. While the average price level was still slightly decreasing at the start of 2013, compared to December 2012, a trend reversal was already visible at the end of January.

Production overcapacities are still influencing the market along the entire value chain, but stock clearances have largely been successful. It is to be expected that in February, for the first time in 24 months, module prices are not going to be lower than in the previous month. On the contrary, a minor increase is in sight, especially in higher performance classes. This particularly relates to products with crystalline cells, as well as to thin film technologies.

Immediate availability is only guaranteed for less popular module types with lower efficiency at the moment. The continuing run on higher efficiency classes with reduced production capacities inescapably leads to longer delivery periods up to several weeks. Manufacturers and suppliers take advantage of this situation and are revising their prices upward.

Another reason for the over demand is the strong Japanese market where, in particular, Japanese manufacturers are able to sell their products at – from their point of view – very attractive prices.

These products are currently missing in other markets or are at least just available at small amounts. Also the further rise in demand in China is showing an effect, in spite of the unattractive margins. The strong project business of Chinese manufacturers is leading to a shortage of popular brands and performance classes, though this might only be a temporary trend.

February 2013: No change expected

Graphic: Solarpraxis AG/Harald Schütt

The PV industry witnessed more price declines for silicon modules and thin film technologies in December. The main reason for this is likely to be efforts of both suppliers and wholesalers to reduce stocks at the end of the year. Especially manufacturers from China are trying to reduce their general stocks in European harbors and warehouses, due to the threat of an anti-dumping tariff in Europe, which is still under discussion in Brussels and could result in heavy write-offs for stocks. High panel stocks in the U.S. hurt the balance sheets of Chinese manufacturers last year, when a tariff was introduced and led to painful write-offs.

As December is traditionally a low season for PV installations in Germany and the rest of Europe, and as there have been hardly any reasons for a rush to gain old feed-in tariffs, there have been order rebates of up to 5% for special volumes.

For January 2013, we do not expect a heavy change in current prices. Production capacities worldwide will have been reduced in general and also due to New Year holidays and the approaching Chinese New Year, thus bringing volumes much more in accordance with actual demand.

January 2013: Prices are still falling – but what will 2013 bring?

Solar module prices kept on falling from November to December. The main reason might be the effort of distributors to keep their stocks as small as possible at the end of the year.

2012 has been a turbulent year for the solar industry in general, characterized by a continuous, rapid price decline. Within the last 12 months, the prices for crystalline modules from China decreased the most (-34%), but there has been a significant drop in prices in all categories, ranging between 25% and 34%.

There are many reasons for this situation: Early in 2012 overcapacity among manufacturers of crystalline cells and modules, as well as among leading inverter manufacturers led to stocks that could not even be significantly reduced by short-term peaks in demand. Bound liquidity, lower sales volumes, higher costs and incredibly low margins increased the pressure on all producers equally.

What developments will take place in 2013 regarding the photovoltaic industry? The variety of manufacturers and products is expected to shrink further as the consolidation phase is far from complete. However, a few of the well-known brands we have heard very little of lately because of the many insolvencies last year could become more pronounced again with the help of new, mostly Asian investors.

The dispute over import and trade restrictions on Chinese modules will keep the industry on tenterhooks for a few months, but is probably not able to change much regarding the desolate situation of many European and North American manufacturers. Chinese companies have already brought themselves in a good position through acquisitions in the relevant markets.